The ugly November jobs report

The November employment report is out, and it’s bad: The unemployment rate is up to 6.7% from 6.5%, which doesn’t sound so horrible at all. But payroll employment is down an estimated 533,000, which is much more than most economists were expecting and is, well, a lot of people.

What it still isn’t is a historic drop: It’s yet another sign that this recession is a much bigger deal than the last two, in 2001 and 1990-91. But in percentage terms (it was a 0.39% drop) there were bigger one month falls in employment in 1980 and, repeatedly, in 1974 and 1975. There were also sharper drops in almost every year of the 1950s, but those were mostly the result of temporary layoffs that were reversed a few months later.

Look through the data divided by industry, and employment is down almost everywhere. The only (modest) bright spots were in education, health care, government, logging and mining, and utilities.

What does it all mean? It means a lot of people are losing their jobs. Beyond that, it’s going to be hard to say what the significance is until we know what the next six months or so look like. If there are only a couple more months this bad, then it’s a manageable if painful downturn. If the declines keep growing and growing, then it’s something else entirely.

Update: The WSJ has a roundup of economic forecasters’ reactions to the report. Their words were somewhat less measured than mine. A sampling: “Almost indescribably terrible.” “We expect labor market conditions to be dreadful for many months to come.” “The threat of a widespread depression is now real and present.”

Update 2: I find it really bizaare that none of the media reports I’ve seen on the job numbers cite the percentage job loss. It’s all about the 533,000, which is “the largest monthly drop in more than three decades,” as the FT reports. Well, in December 1974, when employment fell by 603,000, overall payroll employment was only about half what it is now. So that was a much bigger drop (0.79%), and it happened in the middle of a serious recession, not a “widespread depression.” David Henderson notes this disdain for percentages too, but is too lazy to go calculate them himself.

The employment decline was the largest in a single month since the mid-1970s. Controlling for the size of the population, which is a more relevant measure, last month’s drop was the biggest since 1980.